Tax - Renting house built on site gifted from parent

C

Croesus

Guest
Hello, I've been a long-time viewer of AAM and find the discussions most informative. This is my first post and I'd be grateful for any assistance offered.

Two years ago my father gifted me a site so that I could build a house on it. No tax was paid at the time as we availed of the relief whereby the transfer of a site from a parent to a child is exempt from both CGT and Stamp Duty, provided the child uses the site to build his/her principle private residence on it.

The house is now nearly built but unfortunately, I won't be able to occupy it as it is too far from my work. I plan to rent out the house for a few years before moving into it.

Does anybody know whether there would be any tax implications for me or my father if I rent out the house without first having lived in it?

Many thanks
 
Curiously, as far as i can see there doesn't appear to be any CGT clawback on a site transferred from a parent to a child solely because it is has been let. There is a clawback of the CGT relief (the clawback arises on the person who claimed the relief) where you sell the house and have not occupied the house as your sole or main residence for a period of 3 years. Maybe i'm missing something?
 
Yes, that's my understanding too (and I hope we're correct!) - I think I can rent the house when it is completed and provided I live in the house for at least 3 years before I sell it, my father will avoid the CGT clawback.

As regards the stamp duty relief, I equally can't find anything that would indicate the relief would be clawed back if I were to rent the house. At the time the site was transferred to me, all of the conditions to obtain the relief were satisfied and the transfer deed was presented for adjudication to the Revenue Commisssioners. The only condition of the relief that slightly worries me is the following:


"that the purpose of the conveyance, transfer or lease is to enable the child to construct a house on that site which will be occupied by that child as his or her only or main residence".

At the date of the transfer, it most certainly was the purpose of the transfer to enable me to build my main residence on the site. Although my circumstances changed after the date of transfer so that I'm not now in a position to occupy the house as my main residence, I don't think that's relevant as it appears the relevant date for satisfaction of the condition was the date of transfer.​

Am I correct then in thinking that neither the CGT or stamp duty relief will be clawed back if I let the house for a few years?​

Any further help would be much appreciated.​





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Family member has a situation somewhat similar to this.

Father gifted the site, however the house which was built was immediately rented out.

Has anyone any opinions on the analysis presented above.

Is there any CGT clawback for the father given that the site has not been used for a PPR?

Also , what it the SD position? Is it a strong enough argument to say that the purpose was to live in the house built?

Many thanks
 
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